Baird calls for urgent talks over royalty rise

NSW Treasurer
Mike Baird
has demanded Canberra reverse a plan to cut infrastructure funds to the state if it increases mining royalties to offset a claimed $950 million hit to its budget under the carbon tax.

In a letter to Treasurer
Wayne Swan
, Mr Baird said the federal government’s policy “grossly discriminates" against NSW compared with other states. He said “as a minimum" the government should reverse its decision to dock infrastructure funding to states that increased their royalty rates before November 21, when Mr Swan made the threat in writing.

Mr Baird called for immediate consultation and an end to the ­federal government’s “unilateral decision-making process".

The NSW government announced in its September budget that it would increase mining royalties to recoup losses flowing from the carbon tax. It claims the tax will cost the state $948 million to 2014-15, excluding the expected drop in value of its state-owned electricity assets which it intends to offer for sale next year.

Mr Swan promised earlier this year to re­imburse mining companies for any rises in state royalties in a bid to end a dispute between miners and Labor over the minerals resource rent tax.

The federal Treasurer wrote to Mr Baird earlier this month and threatened to withhold NSW’s share of a $6 billion regional infrastructure fund, funded from the MRRT, unless it reversed the planned royalty rise.

The West Australian government increased its mining royalties in its May budget. It was not threatened with a cut in infrastructure funds because the decision was made before a July 1 cut-off date. Mr Baird said this was “arbitrary and capricious" and that the carbon tax policy design and Mr Swan’s latest threat “seek to target and penalise NSW".